How do you know when a little “acceptable” debt becomes a potentially dangerous situation? For some, the crisis is clear, but for many, the clues are subtle.
As a general rule, no more than 20 percent of your disposable income should go toward debt payments (not including your mortgage).
Quiz: Assess your debt situation
Take this quick quiz to assess your current debt situation.
- Is an increasing percentage of your income going to pay off debts?
- Is your savings cushion inadequate or nonexistent?
- Are you near or at the limit of your lines of credit?
- Can you only make the minimum payments on your revolving charge accounts?
- Are you extending repayment schedules – paying in 60 or 90 day bills once paid in 30?
- Are you chronically late in paying your bills? Are you paying bills with money earmarked for something else?
- Are you borrowing money to pay for items you used to buy with cash? If you lost your job, would you be in immediate financial difficulty?
- Are you unsure about how much you owe?
- Are you threatened with repossession of your car or credit cards, or other legal action?
If you answered “yes” to any of these questions, you should give pause for thought. While a single “yes” is not a sign of impending doom, it may be an indication that you need to make a change.
The Investment Lifecycle: Why We Should All Be Investing By Age
How old you are determines what types of investments you should make, and how much of each asset class you should buy relative to the others. Basically, the advice is to become an incrementally more conservative (and more risk averse) investor as you age.
First authored in 1973, Malkiel’s famous book A Random Walk Down Wall Street lays out a widely recognized formula for successful investing and portfolio diversification. This widely accepted advice from finance expert and Princeton professor Burton Malkiel has withstood the test of time.
Why does investing time horizon matter so much?
The younger you are, the more you can risk in your investing to maximize rewards throughout your lifetime. That said, if you know you’ll need access to your money pretty soon, to pay tuition or buy a car for example, keep it handy and keep it a safe short term investment or savings account. But if you can invest money that you don’t plan to use much of until retirement, a retirement portfolio should reflect a pretty aggressive diversification strategy.
Toronto couple Peter and Nadine couldn’t wait to sell their tiny, two-bedroom house and move into a home big enough to accommodate their growing family. They knew their house would sell fast in Toronto’s hot real estate market, but what they didn’t count on was how much it would cost to make the sale. Nadine, who was shocked by the costs, reckons they paid around $50,000 for real estate agent commissions, legal fees and the money they spent to fix up their home for a quick sale, on top of the purchase price of their new house. That figure also includes the hefty land transfer tax they had to pay for the new home they bought.
How much does it cost to sell your home“All told, the cost of selling took a big bite out of our down payment on a new home,” says Nadine, noting they brought their original budget down.
If you’re thinking of selling your home, you need to budget for the added costs involved in making the sale, especially if you’re using the proceeds to finance the purchase of another home. That means keeping an eye on the following expenses:
Real estate agent commissions: These can run anywhere between 3% and 7% depending on where you live and what you negotiate with your agent. A 4% real estate commission on a house that sells for $350,000 will set you back $14,000. In a hot market, you may be able to avoid this fee by selling your own home. But it’s wise to still consult an appraiser to help determine your home’s worth (starting at around $300) and a real estate lawyer to draw up the paperwork.
Legal fees: Budget for at least $500, sometimes more depending on how complex your deal is.
Home staging: Paul and Nadine painted their house, moved all of their stuff out and even rented art to make their home look great to potential buyers. Total cost for them: $1,000, but that can vary depending on how much fixing up your place needs.
Land or property transfer tax: If you are buying a new home, land transfer tax can easily be your biggest expense. The tax is based on a percentage of the purchase price of the home and it varies from province to province (ranging from .5% to 2% of the total property value).
Moving costs: Depending on where you’re moving and how much stuff you have to shift, you’ll likely need to factor in at least a couple of hundred dollars for moving expenses — unless, of course, you have your own truck and willing friends who will work for pizza and beer.
Simply put: Selling a home can cost a lot of money. And you need to make sure you budget for the costs – otherwise you could get a nasty shock when it comes time to close the deal.
Amercians continue to struggle with their finances, but talking about it remains a taboo.
Short answer: No. The reality is that the overwhelming majority of children don’t need life insurance.
While the advertisements for insuring children may appeal to your emotions, the financial fact is that a loss of a child will will actually remove a major commitment. That may sound harsh, but life insurance is for helping with the financial repurcussions of a death, and it simply costs much less not having a child than having one.
Is children’s life insurance cheap? Sure, but that is because it is rare for children to die. The sales agent will give you a great pitch about how low the cost is, but if you figure the return on investing all those years of premiums into a Roth IRA, or 529 college account, you’ll see that it’s really not such a great deal at all. There are far better investment vehicles that will help you and your child.
The main reason for life insurance is to provide financial security to the family in the event that an income earner dies. So, unless your child is a child movie or rock star, there is probably no reason for you to buy children’s insurance.
On the other hand, far too many parents who are considering children’s insurance are underinsured themselves or simply aren’t insured at all. Your children are much more at risk of losing you, than you are of losing them.
Visit an online insurance website with a good needs calculator. After you figure out how much insurance you should have, use the quote engine to see just how affordable an adequate amount of insurance is.
You don’t work like the rest of the world works. You’re always one step ahead —sharp, efficient, and never at your desk for more than a few minutes. Or at least you’d like to think so. And these apps—each with with a little bit of the future woven into their DNA—can help you get there.
1. GET HYPERORGANIZED
Simple yet powerful, Trello (Android, iOS) organizes your projects into virtual whiteboards made up of card-based to-do lists. You can create a card as a task and assign it to someone on your team with easy sharing features or work on your own personal projects. You can invite others to comment on your cards, and use photos and videos to flesh out your ideas. Don’t let its straightforward interface fool you; there’s plenty under the hood here. It’s just far more intuitive than you’re used to.
2. FIND AN OFFICE ON DEMAND
Breather (Android, iOS) helps you forgo the expense of a fixed office, offering up “spaces” that can be rented out around the city for a half hour at a time. Meet with a client, respond to email while you’ve got some time between appointments, or just get off your feet for a bit. Spaces can be unlocked with your phone and sport Wi-Fi, power plugs, and charging docks. The service is currently available in New York, San Francisco, Montreal, and Ottawa, with additional cities on the way.
Drupe (Android) serves up all your contacts and lets you slide their photos onto whichever app you normally use to communicate with them. Skype for one, email for another, Facebook for another—even old-timey phone calls.
3. FABRICATE A FORM, FAST
Forget paper. If you need to whip up a form on the go, Canvas (Android, iOS) is the way to go. The app lets you cobble together custom forms—invoices, expense reports, checklists, work orders, and more—and sports additional features such as signature capturing and cloud synchronization. There are more than 5,000 prebuilt forms for you to finesse as you see fit.
4. TAG-TEAM YOUR DOCUMENTS AND SPREADSHEETS
Quip (Android, iOS) injects a human element into seemingly mundane productivity software. It’s a relatively fully-featured word processor and spreadsheet app that lets you and your cohorts work on things at the same time, tied together by a real-time chat system used to keep in touch alongside your documents. Files can be pulled in from popular cloud storage services and exported to Word, PDF, and Excel formats when they’re finished.
5. UNIFY ALL YOUR INBOXES
If you’re like most people, you’ve signed up for at least a handful of email services.CloudMagic (Android, iOS) does an impeccable job of tying many services together into one powerful, feature-filled app. It’ll handle your corporate mail with ease, along with Gmail, Yahoo, iCloud, and a host of others, and you can save messages to popular note-taking, list-making, and CRM services.